Suppose There Is an Increase in Expected Future Taxes

question 15

Multiple Choice

Suppose there is an increase in expected future taxes.This will cause which of the following to occur?

• A)the IS curve to shift left in the current period
• B)the IS curve to shift right in the current period
• C)the LM curve to shift up in the current period
• D)the LM curve to shift down in the current period

---

Definitions:

Managed Float

An exchange rate system where the price of the currency is largely determined by the supply and demand in the foreign exchange market but where central banks attempt to influence the rate by actively buying and selling currencies.

Financial Crisis

A situation where the value of assets drops rapidly and the financial system becomes destabilized, often leading to recession.

Supply of Money

The total amount of money available in an economy at a particular time, including cash, coins, bank notes, and money held in bank accounts.

Currency Value

The worth of one currency expressed in terms of another currency, influencing international trade and economics.